Jpmorgan Turkey Central Bank To Raise Interest Rates To 25

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Jpmorgan Turkey Central Bank To Raise Interest Rates To 25

JPMorgan: Turkey's Central Bank To Raise Interest Rates To 25%

JPMorgan (JPM) has recently made a forecast in which it sees Turkey's central bank raise the interest rates from 8.5% to 25%. According to JPMorgan, the central bank of Turkey will likely introduce the new rate hike at the June 22 meeting.

In addition, the statement from JPMorgan also said that the rate hikes would also come with additional forward guidance. This means the bank may introduce smaller rate hikes in the near future if needed.

If the forecast made by JPMorgan turns out to be true, it would be an increase of almost 16.5% from the current levels. But considering the stance of President Erdogan on high-interest rates, the chances of that happening are very low.

Recently, Hafize Gaye Erkan was appointed as the new governor of Turkey's Central bank, and he is scheduled to hold the first policy meeting on 22nd June.

Recession In Turkey

Nicolaie Alexandru-Chidesciuc, an expert at JPMorgan, added that the interest rates in Turkey would reach 30% by the end of 2023. In other words, a lot more rate hikes are on the card as we approach the latter half of 2023.

In addition, a recession is also on the cards during the 2nd half of 2023, according to JPMorgan. For this, they cited the tight credit conditions in Turkey and slower global demand.

On the surface, it appears that such a sharp rise in the interest rates will likely put a drag on Turkey's economic growth. On the other hand, it will also affect consumer demand in Turkey, which would end up lowering the inflation in the country.

In addition, high interest rates in Turkey might also support the already struggling Turkish Lira but that still remains to be seen. After all, all of this is only based on assumptions that the new governor will adopt a hawkish approach.

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